Also commonly known as micro-cap stock fraud, this variant of “white-collar” crime has received little academic attention. This is problematic – and remarkable, when you consider how often such frauds are in the news. Penny-stock fraud (though not referred to as such) made its way onto the big screen in the 2000 film Boiler Room. The film fairly accurately depicts the sociology of such frauds – from the recruitment, hiring and “training” of stock scammers to the actual hustles that are all-too-often successful. For anyone seeking a sober, academic examination of boiler rooms more generally (though including financial scams), Robert J. Stevenson’s classic The Boiler Room and Other Telephone Scams is invaluable.

Perhaps the most audacious of the firms known for massive penny-stock scams was Robert E. Brennan’s First Jersey Securities, the subject of my current research. Unfortunately, what little I have written on the subject in academic journals is not available without subscription and thus can’t be posted here. I could link to numerous internet pieces re: Brennan or FJS, but choosing which of the thousands of sites discussing the inter-related topics is a challenge. A quick primer can be found here in Forbes magazine, which dogged Brennan throughout his fabulous rise (and contributed to his precipitous fall).

As for Brennan, he resides in the Federal Correctional Facility (FCI) in Fort Dix, New Jersey, where he is serving time for bankruptcy fraud. According to the Federal Bureau of Prisons web site, he is slated for release in December 2011.Immediately below is a poor quality version of Brennan in the now-infamous Super Bowl commercial for First Jersey which ran in 1985.

One last note: Some useful resources for anyone researching or investigating stock frauds will soon be found on a page I am creating. These will be a blend of government and private agency sites, along with several academic and quasi-academic sites. Hopefully, when completed the page will become a tool for students and academics, and also for the general public. In advance of that comprehensive page, these may be of assistance:

Philadelphia-area media have been discussing what is believed to be the largest cocaine seizure in city history: more than 600 pounds of the product worth an estimated street value of $28 million. Two South Philadelphia men were arrested on April 2, 2008, including Ricardo McKendrick, Sr.

McKendrick, 56, as discussed in Black Brothers, Inc., was a Black Mafia member circa 1973, according to official law enforcement documents. In fact, McKendrick appeared in the infamous group photo taken in December 1973 at what was dubbed the “Black Mafia Ball” and included an amalgam of the syndicate’s heavyweights and other associates. He appears (#2) on p. 97 of BBI (2007).

Some of the media coverage of the April 2, 2008 arrests can be found here [Note: Philadelphia Daily News and Philadelphia Inquirer links have been removed because they are deactivated within a week or so of an article’s publication.]:

Even though Black Brothers, Inc. is first and foremost a non-fiction, true crime read, I have commonly said it is also a tale of politics and corruption involving complex race relations and media curiosities. After all, Philly’s Black Mafia – in addition to engaging in the more traditional aspects of organized crime such as providing illicit services/goods and committing brutal acts of violence – exploited religion and especially race. This included manipulating several public and private initiatives ostensibly aimed at helping the black underclass and at decreasing crime in the inner city.

Though I have been rather critical of the Philadelphia Inquirer on many occasions, the paper was generous enough to invite me to offer my take on the city’s political culture, based on the conclusion to BBI. My submission was edited slightly, and the following op-ed was published on September 21, 2005. The paper gets the credit for the snappy title and for the related political cartoon.

Philadelphia’s Sick Politics

Sean Patrick Griffinis associate professor in the administration of justice at Penn State Abington.

When I talk with people in Philadelphia and its suburbs about the federal criminal probes of the city’s municipal operations, most of them call me naïve and say that federal investigators and prosecutors are wasting their time, and thus our tax money. In this view, what is being investigated (and, by the way, successfully prosecuted) is “just business.” My response is some version of No!”

True, private business often involves promises, curious deals, lavish gifts heaped on those being courted for contracts, and so on. But in the world of private business, if the brokered deal results in a less satisfactory or more costly product provided to the consumer, it’s not likely the deal will continue.

In municipal business, this model does not apply. A consumer in the private marketplace can choose among brands for a given product, but taxpayers (consumers) rely on government officials to choose among firms and entrepreneurs (brands). Corrupt officials know that, unlike in private business, consumers of city services have no way of knowing whether they are receiving the best product for the lowest price. Thus, various outsiders such as the media, watchdog groups, and law-enforcement officials are forever examining government deals looking for explicit and de facto cases of bribery, extortion and cronyism.

After so many years of pay-to-play culture, Philadelphia taxpayers have no way of calculating how much business, and thus tax revenue, has been lost because good firms stayed away from bidding for city contracts because they do not want to engage in such political chicanery. There’s also no way to estimate how much the costs of goods and services are inflated because the bidding process was fixed or otherwise illegitimate. U.S. Attorney Patrick Meehan, in announcing indictments in June 2004, decried this city’s corrupt political system and its penchant for producing inferior work and chasing good firms away: “Who can blame them? When the game is rigged, why play at all?”

Some of the scams are rigged in a special Philly way. These concern the city’s Minority Business Enterprise Council (MBEC) apparatus. Other cities have seen crooked manipulations of the MBEC process by non-minorities. But in Philadelphia, it’s different. The city’s MBEC problems include racketeering schemes in which legitimate companies were effectively precluded from obtaining municipal work unless they dealt with specific MBEC-certified firms. In several cases unearthed by the Inquirer and other media, this has meant that otherwise above-board municipal contracts were tainted by no-show jobs and cost increases. Thus, instead of the more usual “donations” to gain access to government contracts, individuals have had to enlist the “services” – real or fictitious – of a politically connected minority subcontractor.

It’s pay-to-play with a savvy twist, since the outward appearance is morally and politically powerful. Politicians can claim they are champions of the “disadvantaged,” all the while conniving to funnel significant MBEC work to their wealthy, powerful, connected pals. This often results in kickbacks to these politicians or their political machines. All of this, of course, harms the real MBEC populations, while the pols pulling the strings claim more such deals are needed to reach the (legitimate, unconnected) minority-run firms that get shut out of the process.

Such scams have a long, too long, pedigree in this town. In their heyday 30 years ago, the city’s notorious Black Mafia similarly exploited government initiatives for poor, inner-city minorities, led by their infamous – and bogus – “community development” organization, Black Brothers, Inc. As I traced its contemporary ties to “legitimate” society through dizzying lists of corporate and nonprofit boards, it became clear that there was a remarkably tight-knit core of power brokers in the city. The city seems more like a small town with small-town politics orchestrated by long-standing ties among a select, powerful few.

Many Philadelphians have accepted cronyism. Others seem to take a bizarre, macho pride in the wink-and-a-nod status quo. So it’s not entirely surprising that a prominent civic leader recently suggested renaming Spring Garden Elementary School in honor of the late power lawyer Ron White, whose name is now closely linked with the corruption scandals.

Because of Philadelphia’s decades-long single-party rule, the ingrained political culture, and the lack of public outrage (other than from those who have fled the city), I believe convicted former City Treasurer Corey Kemp when he says – from his jail confines – “I didn’t think I was doing anything criminal.” After all, to him it was probably just business.

Patel correctly notes that I am not in a position to speak publicly about the behind-the-scenes action taking place with the film project.

There was considerable media attention throughout 2005-06 that I am not linking to here, simply because much of that discussion is outdated (assuming it is still available in the first place). A basic Google search for “Black Brothers, Inc.” (including the quotation marks) should suffice for those looking for more coverage. This blog will be updated with new coverage as it appears.

To someone who has researched black organized crime for more than 15 years, and who has endured the ignorance and reticence of various audiences in the media and in academia to this topic, projects such as these (however sensational) are refreshing and needed additions to the otherwise myopic and stereotypical discussions of the underworld. Why it took this long to get such significant historical and sociological phenomena into the mainstream is its own fascinating and frustrating story, one which needs examining.

Please accept my apologies in advance if either of the following two links have been deactivated. As time has passed since BBI was first released in 2005, many other links have already (predictably) been moved or removed.

Unfortunately, easily the best interview of the BBI 2005 “tour” appeared on the Pennsylvania Cable Network, and is not streamed on the net. The 1-hour interview was conducted by host Brian Lockman, who was as well-versed on the book as anyone I have encountered. The resulting interview, which was part of the network’s impressive “PA Books” program, was thorough and incisive. Re-runs of the interview occur infrequently, and the BBI episode is available from the PCN web site.

Since this blog is being created roughly four years after the research and writing for what became Black Brothers, Inc.: The Violent Rise and Fall of Philadelphia’s Black Mafia, I thought it might be helpful to place some historical context here for interested parties.

I wrote an academic text entitled Philadelphia’s Black Mafia: A Social and Political History (Kluwer) that was published in 2003.The text was an extension of my Ph.D. dissertation, and thus was written in the expected academic prose. Further, unlike many mainstream reads, the text was designed to answer certain historical questions (e.g., is/was there such a thing as African-American organized crime, and if so, to what extent is crime “organized”, etc.). Though I am proud of the work, I understood why those outside the world of academia found the reading something short of scintillating. Indeed, even as I wrote the text, I kept a folder of notes on how the book in general, and how certain narratives in particular, could have been written much differently for a wider audience outside the academy. At the time, these notes (some of which were literally written on napkins) were nothing more than concepts for reflection some years down the road. That was, until Milo Books owner (and true crime author) Peter Walsh comically found PBM (this is its own story, especially when you consider Milo is based in the UK). A read of the book led Walsh to conclude I had much more data than I used in the study (which was true in ways he couldn’t have imagined), and that many aspects of the story lent themselves to a more mainstream book.

Mr. Walsh contacted me about the prospects of doing a wholly different book on Philadelphia’s Black Mafia, and sent me a list of several ideas he had when he read PBM. It was if he had seen my notes (and napkins)! We soon agreed on the basic framework for the new book, and were greeted by an unbelievable set of circumstances. Just as Walsh and I were completing the outline for the as-yet-untitled manuscript, a massive federal corruption probe of Philadelphia’s municipal government became hot news, and one of the main characters played a significant role in the Black Mafia history. Thus, Black Brothers, Inc. would not only tap into the known history (though told in a much different manner), it would take readers up to the present and provide them with the best – indeed, the only – explanation of the city’s corruption probe.

The writing of BBI was very difficult in that the book was two-in-one, really. Milo and I seriously considered splitting the project into two books – one largely focused on the Black Mafia and its brutal violence; and another focused more on the current corruption scandal. Certainly, this would have made for much easier reading. I decided to keep the complex story, with its characters numbering in the dozens and its history spanning forty years, in one book because I feared parsing the story would not allow readers to grasp the few degrees-of-separation between members of the so-called under- and upper-worlds. My argument for some time now has been that the media and my academic colleagues make too much of the distinction between “organized crime” and “white-collar crime”. Very few significant criminal enterprises exist for any period of time without the artful assistance of lawyers, accountants, financiers, and the like, not to mention the corruption of public officials. By keeping the entire cast of characters in one book, however dense it became, at least readers would grasp the totality of the story.

One last decision that affected the book concerned documentation. As my students most certainly know, I take footnoting and citations quite seriously, especially in an area such as organized crime which is prone to much sensationalism and mythology. Furthermore, the Black Mafia story includes its share of controversial characters and history, requiring more documentation than usual to instill confidence in the accuracy of the read. By adding a considerable amount of documentation we risked detracting from the feel of a readable, mainstream true crime book, which of course was the goal in the first place. Notwithstanding the decisions to produce one book instead of two, and to include a significant number of footnotes (104 pages of the 464-page book), we were fairly satisfied with the book when it hit shelves in July 2005.

“Sean Patrick Griffin has given us a really extensive look into the Black Mafia…and has produced one of best pieces of research on the underworld in this city that I have ever seen…The level of research, really copious research, I haven’t seen anything on organized crime – of any kind – that is as well-documented as this.”

Elmer Smith, Philadelphia Daily News columnist and host of “The Exchange” on Philadelphia’s leading African-American radio station, 1340AM WHAT

“The book is incredible…The documentation is so thorough, it’s unbelievable…We know about corruption, but this is beyond corruption. This is just amazing stuff.”

Dom Giordano, radio host on Philly’s leading talk radio station 1210AM WPHT

“Black Brothers, Inc. is fascinating.”

Bernie McCain, considered the “Dean of Black Talk Radio” and host of “The Dean’s Talkroom” on the pre-eminent national African-American talk radio station, XM Radio’s The Power

“Sean Patrick Griffin has delivered a richly detailed narrative of the murderous history of the city’s first African-American crime syndicate.”

Kitty Caparella, Philadelphia Daily News

“I couldn’t put this book down.”

Keith Murphy, veteran award-winning broadcaster and host of the “Urban Journal” on XM Radio’s The Power

“Using the federal corruption probe as prologue and epilogue, Griffin presents a confident chronicle of Philly’s Black Mafia, the decades-long collaboration among drug dealers, Muslim clerics and local politicians…Griffin disassembles the racist calumny about black crime: that it is violence born of convenience. Griffin punctures that myth with a salient detail that shows a criminal outfit highly organized: At early Black Mafia meetings, minutes were taken.”

Sasha Issenberg, Philadelphia Magazine

“Sean Patrick Griffin, in surreal detail, lays out the twist and turns, the political and religious associations…Black Brothers Inc…a guaranteed chilling read.”

The Melting Pot, Philadelphia

“Sean Patrick Griffin’s book on the Philly Black Mafia is searing, unrelenting and ruthlessly precise.”

Henry Schipper, producer and director for Black Entertainment Television’s American Gangster series

Black Brothers, Inc.: The Violent Rise and Fall of Philadelphia’s Black Mafia(Milo) was first published in July 2005. Because the book was published as events in Philadelphia were unfolding, especially a massive federal corruption probe, an updated and revised edition was necessary. A new version of Black Brothers, Inc. was published in October of 2007, which also contains narratives on: relevant activities since the first edition was penned in 2004 (including the convictions of 57 people since they were discussed in the seminal edition, led by Shamsud-din Ali), reactions to the book, and how and why various forums (news media, Hollywood, etc.) have covered the Black Mafia story. Here is the new cover:

In case you have stumbled upon this blog without entering through the Penn State Abington page, there are some soundbites (in MP3 files) regarding my research, including issues re: my work on African-American organized crime and my next large project, here.